The Inner Geek of Football: Justifying Premier League Transfer Fees

Last year I wrote a piece which attempted (I would like to think successfully!) to justify the transfer fees paid for two oft-lamented English players: John Stones and Raheem Sterling. Today I revisit that article below, but with a few timely additions…

Editor’s Note: The article below is one of many topics discussed in the book; “The Inner Geek of Football”. This can be purchased from Amazon for £3.99 ($5.24) by following this link. Author Luke Wilkins has been part of Team Togga for the past two seasons and we hope you support his publication! If you’re in the USA buy it at Amazon here.

Let’s start things off by saying that no player in this modern era of football is worth what is paid for them (or to them for that matter). The fact that West Ham’s new signing Andre Ayew – scorer of 12 goals in 34 league games last season for Swansea City – costs roughly (taking inflation into account) the same as the Premier League’s greatest ever striker, Alan Shearer – scorer of 260 goals in 441 league games for both Blackburn Rovers and Newcastle United – should tell you all you need to know on that matter. That said, it is what it is. There is no turning back on the madness that is football finances, but what can be done, is compare the relative value of these signings. And over the past two years, perhaps no signings have produced more debate in the English game than that of John Stones and Raheem Sterling.

The Telegraph stated that the transfer fee for Sterling had “caused outrage, confusion and isolated outbreaks of humour”, whilst John Stones’ value was labelled “startling”. However, are these fair reflections (ignoring also that the players themselves are not the ones dictating these numbers) on the two transfers?

Two things often get overlooked which are important to consider in this debate: longevity, and nationality. Longevity – or how long a player will be able to contribute for – is hugely important. Just like you would expect to pay more for a brand new car than one with 20,000 miles on it, so you should expect to pay more for a player at the start of his career than one at the end (or even middle) of it. Teams pay for potential. Nationality, on the other hand, is key because of the regulations governing football squads. Premier League teams are required to have at least eight home-grown players in their 25 man squad, meaning English players are a necessity, and not just a preference. Given the breadth of footballing talent around the world, and the global appeal of the Premier League, the proportion of adequate English players available is relatively small, thus making them more valuable.

Accounting for these factors in football transfers is fairly straightforward; we simply determine 1) how many (meaningful) years a player has left, and 2) decide upon a fair deduction for their eligibility to EU regulations, to calculate a cost per season for each player. Comparing this new value should give a fairer reflection on each transfer.

The first part of this equation – how many years a player has left – can be estimated based on data showing the mean age of Premier League footballers. Position played needs to be taken into account here, as clearly goalkeepers tend to have longer shelf lives than defenders, who in turn usually last longer than midfielders and forwards. A quick (ish!) analysis of last season’s Premier League starting 11’s showed the average age of each position to be:

Using a bit of stats, we can work out where 95% of these players fall amongst this range, and therefore produce a good value to use for our estimate of a player’s career length. This leaves us with a goalkeeper’s longevity being until age 36, a defender’s until 34, a midfielders until 32, and a forward’s also until 32.

The second part of this equation is a little trickier and involves subjective judgement. How much more valuable is an EU eligible player? Or, put another way: how much does being English add to the cost of a player in the Premier League? There is no set number for this, and it is difficult to even find a ball-park figure when searching the internet, merely that it is “pushing up transfer fees for those types of players”. One possible way to estimate this is by comparing two similar players. Raheem Sterling and Anthony Martial both made big money moves to very rich, very high-profile English clubs last season. Both were very young, and both play as wingers/forwards. But the transfer fee paid for Martial was only 80% that paid for Sterling…does that mean being English adds 20% to a player’s value? Possibly, though it should be noted that Sterling had played for England numerous times before his transfer, whereas Martial had yet to win his first international cap, so maybe this is over-stating it a little. A figure of 15% is a bit more conservative and may be a bit more accurate. As mentioned, this part of the equation does involve some subjective opinion, but 15% seems about right – some may argue it undervalues it, whilst others could argue it overvalues it.

Now that these two overlooked factors have been considered, and the values for our equation determined, the debates surrounding the Stones and Sterling transfers can be viewed in a fairer light. To do this, comparisons will be made with the ten highest transfer fees to the Premier League of the past two seasons (2015-16 and 2016-17).

Table 1. Cost per season is calculated as “(Transfer fee – 15% of Transfer fee)/Years Left” for English players, and “Transfer fee/Years Left” for foreign players. *Age is at the time of the transfer. **Light blue shades indicate transfers from the 2015/16 season; light red shades indicate transfers from 2016/17 season; light green shades indicate transfers from 2017/18 season. ***All values taken from www.transfermarkt.co.uk.

As table 1 shows, Raheem Sterling and John Stones make up the 3rd and 4th most expensive transfers to the Premier League over the past two seasons. But when we take into account our two important factors of longevity and nationality, on a cost per season basis, they now only rank 12th and 15th, respectively. This contrast can be seen clearly in figures 1 and 2 below.

The transfers of Sterling and Stones, then, are not as ridiculous as they first appear. Or probably more aptly, they are at least less ridiculous than some of the other transfers that seem to receive fewer instances of negative publicity. So why is it that little is made of the fees paid for Mkhitaryan, David Luiz, or Pedro? Answers on a postcard…

The 2017 Revisit…

Six recent transfers have been added to the original article above; these were the top 3 overall transfers coming into the Premier League (Lukaku, Morata, and Mendy) and the top 3 English transfers coming into the Premier League (Walker, Drinkwater, and Oxlade-Chamberlain). Unlike with Sterling and Stones though, these new English transfers don’t appear much different when using the new cost per season formula. The fee paid for Drinkwater actually looks considerably worse. This is due to the older ages of these players not affording them as long a “shelf life” as Sterling and Stones at their new clubs.

However, it should be noted that the game changed this summer when Neymar moved to Paris Saint-Germain for £198m – more than doubling the previous world record transfer. What’s more, TV revenues received by Premier League clubs once again reached all-time highs. As such, some of the fees paid during the 2017 summer transfer window may hold little comparative value with previous years. Would Oxlade-Chamberlain – a winger (contrary to his own assertions) with just 12 months left on his contract – have gone for £34 million at the start of August as opposed to the end of August; prior to the Neymar deal? Would Chelsea have paid £34 million for a 27 year old back-up centre midfielder were it not almost certain that the next TV broadcast deal in 2019 would be even larger than the current one? The 2017/18 season might end up marking a new chapter in football finances, which, if anything, just makes the fees paid for Sterling and Stones seem even more reasonable.